How to Identify Cash Loan Scams
If you’re facing financial woes, a cash loan offer may be too good to ignore, especially if your credit is not so good. If approved, you easily get the money in a matter of days or even a few hours for whatever you need. But you have to be careful. With the popularity of online fast cash and personal loan lenders, fraudsters are using the desperation of people with money problems to lure them into cash loan scams.
Thousands of consumers every year are involved in loan scams, so it’s important to know how to avoid them at all costs. While the differences between legitimate cash loan lenders and scams may not always be obvious, there are tell-tale signs that should enable you to identify cash loan fraudsters.
Here are expert tips on how to spot a cash loan scam and the warning signs to look for:
The Red Flags
When it comes to online cash loan scams, there are two main ways that fraudsters use to scam innocent consumers of their money.
- Asking for an upfront fee before you can get a loan
- Using loan phishing scams that impersonate websites of reputable lenders
Upfront payment is ultimately the biggest red flag of a potential scam. If a cash loan lender is asking you to pay an advance fee to give you a cash loan, you should be wary. It actually beats the purpose of getting the cash advance in the first place. Legitimate lenders will not ask you to pay any fees until you have received your cash loan.
Most people fall into this trap after seeing cash loan ads that guarantee quick loans for bad or good credit. Motivated by the ad, you quickly submit your personal information and supporting documents. After a few days or hours, you get a friendly call notifying you of the loan approval, but a processing fee, three-month advance payment and other fees are needed before the cash is released.
Excited by the good news, you pay the money, but the promised cash never arrives, and the upfront fees you paid are lost. Then you realize you’ve just been scammed. To avoid falling into this trap, always go for reputable and verified lenders who will never ask you for advance fees.
Cash Loan Phishing Scams
Phishing has over the years become a huge threat to businesses offering services online, including financial lenders. Fraudsters impersonate legitimate businesses to trick you into providing your personal information which they then use against you. In most cases, cash loan scams that use phishing will often steal your identity, hijack your funds, and open credit accounts in your name.
To avoid this type of scam, you need to be careful with every website you visit. Taking the necessary steps like checking whether the website is secure will ensure that you’re visiting the official websites of known online cash lenders.
Warning Signs You Should Never Ignore
Direct Phone Offers
Never trust a cash loan offer based on a phone call, email, or text. Most people who get scammed by cash loan fraudsters are contacted directly. If you’re offered a cash loan over the phone, this is most likely a scam. Legitimate cash loan lenders just don’t call people out of the blue. Read: How To Get Cheap Mortgage Rates Or Payments
No Interest in Your Credit History
If a lender has no interest in your credit history, then you should be worried. While some lenders will not request for your credit file, most legitimate lenders will want to evaluate your credit history before deciding if they can lend you money. Avoid cash loan advertisements that claim to offer loans with no regard to your credit records.
Not Licensed in Your State
Before doing any business with a financial lender, you’ll want to be sure that they are registered and licensed in your state. If the cash loan lender is not licensed and cannot prove their credentials, simply walk away from the deal.
Guaranteed Loan Approvals
When a cash loan lender claims to offer guaranteed approvals, regardless of your credit history, you should be wary. Until a lender evaluates your credit history and ratings or confirms whether the information you provided is correct, they won’t guarantee any loan approval. In most cases, guaranteed loan approval is a warning sign of a scam.
No Clear Contact and Physical Location Information
If the cash loan lender or broker has no clear contact information and a physical location, beware that this is a common ploy used by most scammers to avoid detection by law enforcement. A physical location helps you do more research and can be verified with local authorities.
Questionable Names and Connections
When a cash loan lender claims to be associated or connected with a reputable financial lender or institution, think twice. Scammers will use almost similar names to established lenders, create look-alike websites, use fake references and testimonials and forge paperwork to take advantage of unsuspecting consumers.
Always take the extra step of getting their phone number from directory assistance or phone books and call to verify if they are legitimate businesses. If need be, verify any connection claims too.
You’re Being Urged to Act Immediately
While you may be in urgent need of money, any lender that seems to push you to take action immediately is likely a cash loan scam. Be wary of loan offers that come with application deadlines and requests for your debit card the same day. Never share your personal information, pay upfront fees or apply for a loan from lenders who put pressure on you to act within a given timeframe.
What to Do If You’ve Been Scammed
Scammers are becoming more and more sophisticated by the day. Although consumers are becoming more informed, cash loan scams still occur on a daily basis with victims experiencing huge losses. In the unfortunate event that you’ve been scammed, there are specific steps you can take.
Report it to Relevant Authorities
There are specific federal and state organizations that specialize in handling online fraud cases in the financial sector. If you have been scammed or suspect fraudulent activity, you can contact the authorized agencies in your state.
Can You Regain Money Lost Through Cash Loan Fraud?
The chances of recovering money lost through online fraud are usually slim. Making a legal case against online lenders who often leave no traces online can be difficult. However, in some cases, banks may be able to help you.
What to Do about Paid Brokerage Fees
In case you paid a broker to arrange a cash loan which hasn’t materialized within six months, you’re entitled under law to get your money back. Report to the relevant authorities and remember that this only applies in such cases.
Dealing with Nuisance Calls
If you’re constantly getting unsolicited calls or messages from loan companies to apply for a cash loan, you need to report them. Cold calling is a big no when it comes to cash lending. Avoid any unsolicited calls, emails or texts that offer cash loans.
The Bottom Line
With cases of online fraud increasing every day, regulatory bodies in charge of the cash loan markets are implementing tougher rules for lenders to ensure that consumers are being protected and informed on the right steps to take when borrowing money to avoid being scammed.
Whether you need easy installment loans or other secured loans, it’s your responsibility as a borrower to always be cautious when dealing with cash loan lenders. Do a background check of the company to verify their identity, their physical location, registration details, application process and lending options. By doing so, you will be sure that you’re working with a trustworthy lender for your cash loan needs.